The Financial Times, The New York Times and The Wall Street Journal are all reporting this morning on Lehman's plans to sell Neuberger Berman, its asset management business. A bunch of private equity firms have received detailed financial information about Neuberger. The Journal names Carlyle Group, Hellman & Friedman LLC and General Atlantic LLC, while the NY Times adds Kohlberg, Kravis & Roberts, J. C. Flowers, the Blackstone Group, and Apollo Management.
As fun as it is to watch the papers play catch up on this story, coming weeks late and dismissing earlier reporting as "speculation," let's dwell on the fact DealBreaker readers have known about this story for weeks, thanks to our deep investigative reporting repeating Charlie Gasparino's CNBC reports.)
The real news here is what this tells us about Lehman's financial health and internal politics. Selling Neuberger Berman seems like a desperation move. It's executives are said to be threatening to leave due to Lehman's share price. Mass departures would likely result in client defections as well. In short, if Lehman doesn't sell now it could find there's nothing left to sell a year from now.
What's more, the attempt to sell Neuberger Berman is being read as a leading indicator of huge losses at Lehman. With just two weeks left in the third-quarter, Lehman may be scrambling to raise money by selling assets to make up for credit market write-downs. The attempt to sell CMBS isn't going very well, so a Neuberger Berman sale is the last, best option.
Here's the question that's probably unfair to ask: if they sell Neuberger, what will Lehman do if it has fourth quarter write-downs?
Posted by guest , Aug 19, 2008 9:30AM
You can use mayo to relieve the itch from poison ivy.
Posted by guest , Aug 19, 2008 9:38AM
It's also effective at battling hemmorhoids
Posted by Debter , Aug 19, 2008 9:39AM
It might be relatively low margins, but it's steady CF. Lehm must be in terrible condition if it's will to give up this revenue stream. (Yes, I have an amazing grasp of the obvious)
Posted by guest , Aug 19, 2008 9:40AM
Does anyone else have any other handy uses for mayo?
Posted by guest , Aug 19, 2008 9:41AM
C+MER+LEH=Dead Man Walking. Bigger question: How big will Fuld's golden parachute be? What about Thain?
Posted by guest , Aug 19, 2008 9:41AM
Everyone at Lehman will be forced to work 3 shifts a week at Pranzo. Their earnings shall be directly contributed to the executive severance fund, cuz you know Dick has to get paid on his way out.
Posted by Master of None , Aug 19, 2008 10:23AM
Better question: will the Fed will continue to take formerly unprecedented steps to keep i-banks from failing?
Remember that the stability of the financial system is the #1 priority. With a freight train of corporate bankruptcies arriving in the next 6-9 months, whomever is still around will have to settle all the outstanding CDS.
That will be an interesting exercise.
Posted by guest , Aug 19, 2008 10:24AM
Fuld won't face it that LEH cannot remain independent any longer, and a Canadian bank might be his best option.He keeps on wasting good money after bad..*sigh*
Posted by guest , Aug 19, 2008 10:27AM
You can also use mayo instead of KY jelley. Anybody besides me tried it?
Posted by guest , Aug 19, 2008 10:30AM
added benefit: it makes you look like you came like a porn star
Posted by guest , Aug 19, 2008 10:38AM
5 Re Thain. I've always viewed him as someone who will act differently than the rest because he has no emotion invested in his firm's assets. Unlike Fuld, et al, who were at the helm when the crap was put on the books.
Posted by guest , Aug 19, 2008 10:44AM
We should all go out and make a killing on Lehman Stock. If Nurburing Bermann sells for $10B then that's more than the current m.cap of all of Leh.
This is easy money, low hanging, high flying fruit that's up for grabs. Screw Einhorn, go Long Lehman.
yours truly,
hedge_fund_baller.
Posted by guest , Aug 19, 2008 10:44AM
@8. Canadian banks have a dismal record on Wall Street (and to a lesser extent The City). I believe CIBC "World Markets" sold Oppenheimer for something like 100 dollars.
Posted by guest , Aug 19, 2008 10:45AM
8 Where did this Canadian bank idea come from? My understanding is that Scotiabank is the best of the lot but still by no means in great shape. Your thoughts?
Posted by guest , Aug 19, 2008 10:48AM
Easy money right now is short FRE.
Don't you think market is already pricing Nur into EV? Not like the asset is a secret.
Posted by guest , Aug 19, 2008 10:53AM
15- You want to argue me on this one? I have an outstanding track record of risk adjusted alpha generation.
FRE & FNM is already priced in. How much further can the apple fall from Newton's skull, as I'd like to say it?
PS: Fuld and LEH haven't paid or bribed me in any way to influence your opinions.
hedge_fund_baller
Posted by guest , Aug 19, 2008 10:55AM
@10:48
What is EV?
Posted by guest , Aug 19, 2008 10:56AM
"low hanging, high flying"
???
Posted by guest , Aug 19, 2008 11:02AM
17-
EV is Enterprise Value
Posted by guest , Aug 19, 2008 11:06AM
Obviously, ARC hasn't blocked access to Dealbreaker.
Posted by guest , Aug 19, 2008 11:08AM
@16
If it was priced in the price would be $0. Common to debt is 860x and there is a tax asset that is multiples of common that will be worth exactly $0 when nationalized. NFW this thing is around in a year with same common shares. I'd be almost willing to bet the sub takes a hit before its over.
GL on LEH. Will potentially be a good trade in three years but a bumpy ride.
Posted by guest , Aug 19, 2008 11:09AM
Hey guys, thanks for the mayo tips, I think they will come in handy.
Posted by guest , Aug 19, 2008 11:10AM
I believe Kenard Grant from Seeking Alpha is the hedge fund baller
Posted by Suits , Aug 19, 2008 11:30AM
16 - Alpha is a risk-adjusted measure. So saying "risk-adjusted alpha" makes no sense.
Posted by guest , Aug 19, 2008 11:35AM
Anyone who calls themselves hedge fund baller is not a baller.
Probably trading $50 currency positions in an upstate NY dorm room.
Posted by guest , Aug 19, 2008 11:36AM
21 NFW this thing is around with same common shares? Maybe, but I think that the market is pricing them to take into account that the political clout of Fan and Fred could prevent their common from vaporizing. Your thoughts?
Posted by guest , Aug 19, 2008 11:45AM
The financials are coming down hard.
it's all in the charts.
Posted by guest , Aug 19, 2008 11:52AM
yes 27, for instance the Triple Lindy Formation in MER was so obvious.
Posted by guest , Aug 19, 2008 12:02PM
KENARDDDDDDDDDDD GRANT
Posted by guest , Aug 19, 2008 12:30PM
FNM is much better shape than FRE. I think still in trouble but if I was going to choose one to be short it would be FRE. Much smaller, less impact if it goes away, could even seem "tough" while preserving housing market with a less brutal resturturing of FNM.
Political reality is that subsidizing common (or even preferred) with taxpayer money will be extremely unpopular.
I think they are talking right now about how to address and the price declines are a result of the (slow) realization that the common is dead. Only a matter of time til confirmation hits the papers.
Posted by guest , Aug 19, 2008 12:36PM
@24 & 25 it is absolutely hysterical when the supposed “BSDs” on this site get outted. Thank you hedge_fund_baller for making me laugh so hard – what an ass.
Posted by guest , Aug 19, 2008 12:37PM
@9:
yes. The only drawback is that is not spermicidal.
Not to mention any offspring you conceive have a 0.039% chance of developing Hellman's Disease, a rare psychiatric condition characterized by an overwhelming compulsion to smear mayo on everything around you and then lick it off.
Posted by guest , Aug 19, 2008 12:42PM
@21...who is paying you? Three years - I don't want to say that the building at 745 will be converted to parking...maybe medical space.
Posted by guest , Aug 19, 2008 1:25PM
LEH selling NB is like Ron Jeremy selling his nuts.
Posted by guest , Aug 19, 2008 1:26PM
@14 Canadian banks rumour been around for a while. Doubt it, they excel at retail, and just get by in I-banking (with some exceptions)
http://www.bloomberg.com/apps/news?pid=20601082&sid=ap0tFgRMV_zk&refer=canada
Posted by guest , Aug 19, 2008 1:51PM
Hey 32, thats good to know. Are you a Doctor. I had previously thought that Mayo was a spermicide. Some also told the that the Chinese claim mayo is an aphrodesiac. Could you please comment.
Posted by guest , Aug 19, 2008 6:14PM
@13 a little late here but ... canadian banks are in fine shape the issue is more that they dont know dick about running capital markets businesses and most of their attempts have been financial disasters.
but i'd rather have a deposit account at BMO than 90% of u.s. banks right now any day of the year.
Posted by guest , Aug 26, 2008 1:15AM
What makes anyone think Neuberger Berman will be profitable going forward?